Pros and cons of pricing by the word, project, or hour

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This week’s topic: Pros and cons of pricing by the word, by the project, and by the hour

Pricing is stressful, no matter how long you’ve been freelancing. Recently, I had two interpreting clients offer more money than what I asked for. Ugh! I’m the one who teaches classes about these things, and still, I probably left money on the table.

Today, let’s talk about pricing translations (not interpreting, a totally different topic) by the word, by the project, and by the hour.

Pricing by the word

There are lots of disadvantages to pricing by the word, and yet it remains the standard in the translation world. Why? Partially because of habit (this is the way we do it, because this is the way we’ve always done it), and partially because it’s totally straightforward. That’s the main advantage of pricing by the word: particularly if you price by the source word, everyone knows ahead of time how much the translation is going to cost. At 20 cents per word, a 1,000-word translation is going to cost $200, whether it takes the translator two hours or ten hours to do it, which has some advantages:

• The client knows ahead of time how much the translation is going to cost
• The translator has an incentive to specialize/become more efficient (this also has a downside, more on that below), and more experienced translators tend to earn more, because they work more quickly

My sense is that per-word pricing hangs on because it’s simple. But it has some significant downsides:

• Clients (not the kinds of clients you want to work for) may try to split hairs over the word count: different tools count words in surprisingly different manners; the source and target word counts may be very, very different (with the translator wanting the higher count and the client wanting the lower count); the client may want to subtract repeated text, and so on. At the start of my career when I was taking pretty much any work I could get, I even had clients who wanted to not pay for things like proper names and numbers (“because they don’t have to be translated”). All of this is really frustrating from the translator’s point of view.
• The translator has an incentive to rush, or to take on too much work in order to make more money. Lots of translators do not work like this, but it’s just an economic fact: there’s a disincentive to take half an hour to research a term, when you’re getting paid in cents per word.
• The translator is penalized for spending extra time on the translation. This is one reason I often say, you actually do your clients a favor when you charge a rate at which you feel that you’re being paid fairly. You do the client no favors if you’re sitting there thinking, I’m not going down a rabbit hole of research, because I simply can’t afford to.

How about per-project?

Per-project pricing is honestly my favorite way to price. It gives the client one number to focus on (“How much is this going to cost?”), and it saves the translator from committing to a per-word rate that applies to all situations. Lots of translators wonder, can I adjust my rate when the source document is an un-editable PDF that I have to recreate in Word? What if the source text is particularly dense or technical? What if it’s slightly rush but not hair-on-fire rush? Per-project pricing solves all of these issues.

In my opinion, the only issue with per-project pricing is that it can seem opaque to the client. Some clients will ask, what is this rate based on/where did it come from? That’s not a reason not to use per-project pricing, because it’s easy enough to explain to the client that your quotes involve various factors: length, format, difficulty, deadline, etc. but it’s something to be prepared for.

Hourly?

Interestingly enough, hourly billing is probably the most common increment in many professional service sectors, but the least common in the translation world. Attorneys, accountants, language teachers, software trainers, editors…they mostly bill by the hour. Billing by the hour is transparent for the client, and guarantees that the translator will be paid for all of his/her time. What’s not to love! Well, hourly pricing has one major downside: either the translator or the client has to absorb some uncertainty:

• If the translator says, “A 1,000-word translation will take me three hours,” then the client feels secure about how much it’s going to cost, but the translator is taking a risk, and that can go both ways. Maybe this translation takes two hours, or maybe it takes four hours. If the translator commits up-front to a number of hours, that’s not a whole lot different than charging by the word
• If the translator says, “A 1,000-word translation will take me between two and four hours,” the client may get nervous. Let’s say the translator charges $90 an hour. There’s a big difference between $180 and $360, and the client won’t know the final amount until the translator sends the bill. Apply that principle to a 30,000-word project, and you understand why hourly billing has some issues.

I don’t have a definite answer to this question, but especially if you work for direct clients, it’s up to you to decide how to bill them. Michael Schubert, a German to English translator whose business advice I really admire, observed (correctly, I think) that most translators default to per-word pricing, even with direct clients, while most clients “don’t know to count words until we teach them to count words.” Food for thought!